Monthly Archives: March 2014

This is how little I know

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It’s terrifying how easy it is to be blithely unaware of the intellectual history of economics, even if you read a lot, as I do. History of thought is one of the glaring gaps in undergraduate and graduate courses, alongside economic history per se.

Last week, when I was speaking at the Manchester Statistical Society, my discussant, Dr Richard Pryke, mentioned the work of Ian Little. At the weekend I looked him up and found this fabulous obit written by Professor Peter Oppenheimer and this by Robert Skidelsky.

It turns out that Prof Little’s [amazon_link id=”0198281196″ target=”_blank” ]A Critique of Welfare Economics[/amazon_link] of 1950 was hugely influential and was reissued in 2002. I’m not at all proud of knowing nothing about it, and will try to fill the gap.

[amazon_image id=”0198281196″ link=”true” target=”_blank” size=”medium” ]A Critique of Welfare Economics[/amazon_image]

Vulnerability and sustainability

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John Naughton’s column in today’s Observer about governments’ online spying sent me to Cory Doctorow’s essay of a few days ago about the parallels between a secure internet and public health. Both are worth a read.

They set me thinking about the meaning of sustainability. My last book, [amazon_link id=”0691156298″ target=”_blank” ]The Economics of Enough[/amazon_link], was about sustainability defined broadly to include not only environmental issues but also economic assets including human capital and infrastructure and social sustainability (hence inequality). All matter for the fundamental question of whether or not future generations will be able to have at least as high a standard of living as we do. Many people in the developed economies think the answer is ‘no’ when they look at what’s happening to house prices, pensions, student debt and a lacklustre economy with no real wage growth. It’s hard to separate the effects of cycle and trend & I think it’s too soon to lose hope, but the idea of ‘secular stagnation’ is around.

[amazon_image id=”0691156298″ link=”true” target=”_blank” size=”medium” ]The Economics of Enough: How to Run the Economy as If the Future Matters[/amazon_image]

Anyway, I thought about the question of changes in assets of all kinds as an indicator of sustainability. The two columns made me realize I didn’t think enough about risk questions in that book. No doubt this features prominently in the environmental literature. But when you think about various examples – the effect of floods or unrest in Thailand or the Japanese earthquake on auto industry supply chains, the vulnerability of the UK’s west country to one train line right next to the coast being washed away in storms, or indeed the extraordinary vulnerability of the whole of the global economy to malign activities affecting the internet – the sustainability of the economy is obviously in question.

I find the Doctorow/Naughton parallel with public health persuasive. How would we react if we learned that the government was dealing with the threat of bird flu by secretly developing particularly virulent strains of the virus to use on – well, on whom exactly? –  rather than working on a vaccine.

Ian Goldin’s new book, [amazon_link id=”0691154708″ target=”_blank” ]The Butterfly Defect[/amazon_link], out in May, looks at exactly this kind of question. One to look out for. He’s talking about it in Oxford soon.

[amazon_image id=”0691154708″ link=”true” target=”_blank” size=”medium” ]The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It: How Globalization Creates Systemic Risks, and What ot Do about it[/amazon_image]

21st century capitalism – discontents but no defenders

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Thomas Piketty’s [amazon_link id=”067443000X” target=”_blank” ]Capital in the 21st Century[/amazon_link] is all over the blogs and magazines in the US but Amazon UK is tantalising me by sending successive emails saying the shipping date over here has been delayed. It now won’t reach Enlightenment Towers until mid-April.

[amazon_image id=”067443000X” link=”true” target=”_blank” size=”medium” ]Capital in the Twenty-First Century[/amazon_image]

Meanwhile, there are other serious attacks on 21st century capitalism to divert the reader so inclined. I see that David Harvey’s [amazon_link id=”B00IOLFGBK” target=”_blank” ]Seventeen Contradictions and the End of Capitalism[/amazon_link] is available now. I just read George Packer’s [amazon_link id=”0571251293″ target=”_blank” ]The Unwinding[/amazon_link], an epic account of the devastation of the American working class. And I’ve started Greg Clark’s [amazon_link id=”0691162549″ target=”_blank” ]The Son Also Rises[/amazon_link], whose introduction got the hairs on the back of my neck to rise because of its radical implications for how we think about social mobility – we’ll see if the rest of the book delivers on that promise.

[amazon_image id=”B00IOLFGBK” link=”true” target=”_blank” size=”medium” ]Seventeen Contradictions and the End of Capitalism[/amazon_image]   [amazon_image id=”0571251293″ link=”true” target=”_blank” size=”medium” ]The Unwinding: Thirty Years of American Decline[/amazon_image]   [amazon_image id=”0691162549″ link=”true” target=”_blank” size=”medium” ]The Son Also Rises: Surnames and the History of Social Mobility (The Princeton Economic History of the Western World)[/amazon_image]

All of which raises the question – who, if anybody, is writing convincingly and interestingly in defence of 21st century capitalism? At the moment I can’t bring any books that would serve this purpose to mind, even in the technology literature where you’d most expect to find them. There are of course some optimists, like Charles Kenny in [amazon_link id=”0465064736″ target=”_blank” ]The Upside of Down[/amazon_link], but that’s not quite the same thing as a rousing defence of the system. Any nominations?

Can the Unwinding be unwound?

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George Packer’s [amazon_link id=”B00C4GT040″ target=”_blank” ]The Unwinding: thirty years of American decline[/amazon_link] is out in paperback so I’ve caught up with it at last on my travels this week. It’s an absolutely wonderful book, evoking that widespread sense – everywhere in fact, not just in the US – that the system has gone awry, things are misaligned, and no individual can do anything about it.

[amazon_image id=”B00C4GT040″ link=”true” target=”_blank” size=”medium” ]The Unwinding[/amazon_image]

The book traces the 30 years through a braid of several individuals’ stories, recounting their ups and downs through the Clinton years, the Bush years and into the Obama years. Some of the characters are well-known – Newt Gingrich features, as does Peter Thiel. The main threads, though, are unknowns whose stories encapsulate important parts of the nation’s story during its ‘unwinding’ – the unwinding of “the coil that held America together in its secure and sometimes stifling grip.”

Although this is not a technocratic analysis, Packer has an ability to drop in sentences that crisply capture a sharp point. The views of a new (and I turned out, one term) Democratic congressman, Tom Perriello, are summed up thus: “the elites in America didn’t have answers for the problems of the working and middle class any more. Elites thought that everyone needed to become a computer programmer or a financial engineer, that there would be no jobs between eight dollars an hour and six figures. Perriello believed that the new ideas for making things in America again would come from unknown people in obscure places.”

One of his other characters, a longtime Democrat functionary who crosses over into lobbying, is enticed back to work for a senator during the Obama administration. Seeing Rubin, Summers, Geithner getting their posts, and all attempts to bring finance to heel failing, he reflects: “The establishment could fail and fail and still survive, even thrive. It was rigged to win, like a casino, and once you were on the inside you had to do something dramatic to lose your standing, like write a scathing op-ed.” A short chapter about Bob Rubin in the book is absolutely devastating.

A lot of this, we know. But this book rekindles one’s outrage by attaching people and their emotions and stories to a clear X-ray vision of the underlying economic and social changes. I thought it was a terrific read. But also depressing. Can the Unwinding be unwound? Obviously not. In optimistic moods, I’m with congressman Perriello in holding out hope for the obscure people weaving a new social fabric. It’s just not always easy to stay optimistic.

Reason on trial

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I’ve been putting off reading [amazon_link id=”1849546223″ target=”_blank” ]Prisonomics[/amazon_link] by Vicky Pryce because I’ve known and liked and admired her for many years, and was absolutely shocked by her getting a prison sentence. In the book she says she had her first good sleep for a long time on her first night in Holloway, after the stress of two trials and the media frenzy, but I spent that night sleepless worrying about what the experience would do to her. The book is her account of her time in prison, and what she learned from both personal experience and subsequent research. I’m very glad to have read it. It’s actually a page turner, well-written, full of information and insight, and a powerful analysis of the extremely poor value the UK gets from the way its criminal justice system treats women. And it turns out Vicky coped well with being in Holloway and then one of the country’s only two open prisons for women, thanks in large part to the support she got from other prisoners.

[amazon_image id=”1849546223″ link=”true” target=”_blank” size=”medium” ]Prisonomics: Behind bars in Britain’s failing prisons[/amazon_image]

It wasn’t really a surprise to learn that imprisoning women is terrible for their children, has no deterrent effect, and that lots of women in prison have mental health and drug problems. But the figures set out in the book are staggering. The research suggests 40% of women in UK prisons have learning diificulties, and 48% have a reading age of 11 or lower. Nor did I know that prisoners are released with just £46 even if they have no accommodation – many (4 in 10) lose their homes while inside, and the book tells of one woman deemed by her local authority to have made herself ‘intentionally homeless’ (and therefore not meriting housing) by being sent to prison. Ex-prisoners find it hard to get jobs because they have to declare their convictions. Reoffending rates are high after prison sentences at least in part because of sheer desperation.

Very few women prisoners have committed violent crimes, yet the high rate of imprisonment in the UK (compared to other countries) inflicts dreadful emotional violence on their children, contributing to family breakup and children going into care – and thus increasing the likelihood of their lives deteriorating. There is so clearly an overwhelming value for money case for spending public funds on helping women bring order to their lives, getting training and jobs, rather than imprinsoning them at high cost and with adverse effects on the rest of their lives and their children’s. Yet the UK saw a 27% rise in the women’s prison population between 1996 and 2011. We have a public culture that emphasises retribution in criminal justice and that demonises women too.

So Vicky’s book makes a powerful case for change, and her experience has turned her into a ardent campaigner for reform. I do recommend reading it, not only for its inherent merit but also because royalties go to the charity Working Chance. But it’s depressing too. The system is awful. But can you imagine a single high-profile politician campaigning for criminal justice reform rather than competing to appear ‘tough’ on crime? There is truth in the cliche: you can’t reason people out of what they were never reasoned into.